You can add Nouriel Roubini to the list of Eurozone haters. In a co-authored piece with Arnab Das for the Financial Times, he argues breaking up the Eurozone is the best solution for dealing with its sovereign debt crisis.
“Splitting up may be hard to do, but it can be better than sticking to a bad marriage,” he ranted.
Interestingly, the European Central Bank (ECB) has responded to Europe’s ‘marriage crisis’ – not with marriage counseling – but with cheap loans to buffer banks from a capital shortfall. Roubini says this move is a temporary measure and still doesn’t address the deeper rooted problems facing the region.
None of this should come as a surprise to ETFguide’s readers. We’ve been consistent in our warnings about the Eurozone.
Going back to September 15, 2011 in our Weekly ETF Pick here’s what we said: “European politicians are purposely misleading the public to avoid what they already know to be true: The Eurozone’s days are numbered.”
Europe’s finance leaders deny that Greece will need another debt restructuring. They’ve ignored the fact that Portugal or Ireland may need the same medicine. And what about Spain and Italy? What about them?! Both countries have great museums and make delicious ravioli tapas.
The risk appetite for skydiving into Spanish bonds is suddenly not as strong as previously thought. It just shows how the credit market can turn on the dime. In its latest auction, the Bank of Spain tried to pawn 3.5 billion euros worth of debt, but only 2.59 billion euros were sold to suckers.
Roubini says one solution for divorcing the euro currency bloc might be for weaker members like Portugal, Italy (NYSE:EWI), Ireland (NYSE:EIRL), Greece (NYSE:GREK), and Spain (NYSE:EWP) to leave, while a core of others like France (NYSE:EWQ), Finland (NYSE:ENFL) and Germany (NYSE:EWG) remain.
Defying the crisis, the euro currency (NYSE:FXE) is already ahead by roughly 2% since the beginning of this year and European stocks (NYSE:IEV) have surged by 9%. ETFguide via the ETF Profit Strategy Newsletter and Weekly ETF Picks has outlined key safety levels for trading the euro.
Roubini is an economist and NYU professor who’s been referred to as “Dr. Doom” for his pessimistic overtures.
Interestingly, Dr. Doom isn’t as bearish as news headlines suggest.
Roubini is long New York real estate ever since late 2010. That’s when he paid $5 million for an apartment in Manhattan’s East Village. Roubini’s abode was described by bloggers as a “party pad.” Apparently, even doomsayers like to party.